Kroger-Albertsons Merger Could Give Walmart Shoppers A Low-Cost Grocery Alternative

By Pymnts

Consumers are already bracing for another year of higher food prices, with U.S. shoppers continuing to seek deals and trading quality for quantity. While Walmart has so far benefited from this shifting consumer behavior, a possible mega-merger could change all that.

As reported The Wall Street Journal (WSJ) there has been no final Federal Trade Commission (FTC) decision of the KrogerAlbertsons merger as antitrust regulators continue reviewing the $20 billion deal, first announced in October.

In focus is how the sector could be affected nationwide, with the scope including online delivery and pharmaceutical services. The merger would undoubtedly affect the entire sector, from the smallest independents to the nationwide household names.

However, Walmart — which has so far been fending off market share capture attempts by Amazon and Dollar General — could see the most direct competition.

This consumer emphasis on value and cost-cutting continues unabated as shoppers change their behavior, both in their brick-and-mortar merchant choices and digital channels. This shift is quantified in PYMNTS’ “Changes in Grocery Shopping Habits and Perceptions,” which tracks factors that have reduced consumers’ in-store shopping.

To make ends meet, shoppers are trading down when it comes to food quality, with dollar stores pushing private-label offerings and consumers replacing restaurant meals with supermarket prepared foods. This is only expected to increase as pandemic-era SNAP benefits expire nationwide at the end of March, cutting approximately $90 per month from the budgets of most beneficiaries. With 53% of consumers surveyed saying that high prices and lack of deals are driving them to reduce their in-store shopping, the merger could push them further into seeking savings online.

The proposed Kroger-Albertsons merger could actually be a benefit to value-seeking shoppers. Their enormity, much like Walmart, may permit lower prices for consumers through an expanded supplier network that would additionally move perishables such as produce through the supply chain more quickly.

Clearly, no one has a crystal ball forecasting how the Kroger-Albertsons deal might play out, if it happens at all. Consumers may still need to wait until the FTC reaches a resolution on this case to understand the ultimate impact on their wallets.

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